Easy Trip Planners IPO Opens: Should You Subscribe?

There will be a flurry of IPOs this March to tap the current market momentum when the indices are seen to scale new highs again this month. Now, even as the current market momentum in the travel industry has still not revived to the pre-Covid level, here we will tell whether or not this shall be a good opportunity to park your money in or not.

Issue details:

The 3-day public issue opens today and the price band has been fixed between Rs 186-187 per share and is entirely an offer for sale (OFS). At the upper price band, the total issue size stands at Rs 510 crore.

Issue objective:

From the issue, the company shall not receive any funds as the funds will enable in firming the company's branding, offer liquidity to current shareholders and also realize benefits of listing on national bourses.

Valuations:

As per Geojit at a P/E of 49x (annualised basis on FY21E EPS of Rs 3.8) the issue of Easy Trip planners is fairly priced. Though there are no listed peers of similar operating model.

Financials:

It boasts of a strong balance sheet that has not utilized outside funds for expanding business or working capital requirement. The company is the only profitable among other key online travel agents and posted a return on equity of 36 percent over FY18-20. This was on the back of healthy revival in travel and tourism during the period, nonetheless there has been high volatility.

Company's USP:

No convenience fee model has helped the company as in case where there are no alternative discounts or coupons being availed, the facility helps the company record repeat transactions. With a small company size in comparison to its business size which help drove profitability.

Should you subscribe?

ICICI Securities

Taking cognisance of the huge growth opportunities for EaseMyTrip and a lean cost of operations that would aid the flow of profitability to the bottom line, we recommend 'Subscribe' rating to the issue.

Geojit Financial

With no listed peers and as the travel business is expected to pick up its charm going forward, we assign a 'Subscribe rating' for the issue on a long-term basis considering the wide distribution network, rising digitalization, negligible debt and asset-light business model of the company.

Hem Securities

We like the strong fundamentals as it being the only profitable OTA with the highest CAGR growth because of lean and cost-efficient operations. Also with the ongoing vaccination drive, we believe that in the coming months the airline industry will be back to normalcy and volume will surge which largely benefits the company. We recommend investor to 'subscribe' to the issue for the short and long-term.

GoodReturns.in